The name comes from the initials of the Association of Consumers and Taxpayers, founded in 1993 by Roger Douglas and Derek Quigley, from which the party grew in 1994. The party is commonly known by the acronym "ACT" and pronounced as a word rather than as initials.

At the New Zealand general election, 2011, ACT advocated lowering tax rates and also supported something approaching a flat tax, in which tax rates would not be graduated based on wealth or income, so every taxpayer would pay the same proportion of their income in tax. The flat tax rate that ACT proposed would be approximately 15% with no tax on the first $25,000 for those who opt out of Government accident, sickness and healthcare cover.[5] Aligned to the lower tax proposal, ACT also wants to reduce or remove some Government programmes which it sees as unnecessary and wasteful and to increase self-reliance by encouraging individuals to take responsibility to pay for services traditionally paid for by Government.

Members of ACT's caucus in parliament voted 5 to 4 in favour of the 2004 Civil Unions legislation which gave the option of legal recognition to (among others) same-sex couples. A majority also supported the legalisation of brothels by the Prostitution Reform Act 2003.[7]

The Act Party's current position on climate change is that there is no warming trend in New Zealand.[8] The ACT Party went into the 2008 general election with a policy that in part stated "New Zealand is not warming" and that their policy goal was to ensure "That no New Zealand government will ever impose needless and unjustified taxation or regulation on its citizens in a misguided attempt to reduce global warming or become a world leader in carbon neutrality".[9] In September 2008, ACT Party Leader Rodney Hide stated "that the entire climate change - global warming hypothesis is a hoax, that the data and the hypothesis do not hold together, that Al Gore is a phoney and a fraud on this issue, and that the emissions trading scheme is a worldwide scam and swindle."[10]

The name comes from the initials of the Association of Consumers and Taxpayers, founded in 1993 by Roger Douglas and Derek Quigley. From this, they formed ACT New Zealand in the following year as a political party.[11]

However, after 2008, some caucus MPs and organisational members became dissatisfied with ACT's coalition partner status and argued at ACT's national conference (27 February 2010) that there were insufficient fiscal responsibility policy gains for their party and that the National Party had resiled from its earlier commitment to the politics of fiscal responsibility over the course of the previous decade. Throughout 2009, there had been at least one reported ACT caucus coup attempt against Hide's leadership, believed to have been led by Deputy Leader Heather Roy and Roger Douglas. However, it faltered when Prime Minister Key supported Hide's retention and threatened a snap election. In addition, the party's polling of a lowly one to two percent in most opinion polls meant only Heather Roy might accompany Hide after any forthcoming general election, if Hide retained ACT's Epsom pivotal electorate seat.[19]

On 28 April 2011, Hide announced that he was resigning the ACT leadership in favour of former National Party leader and Reserve Bank Governor Don Brash who joined the party that morning. Brash's leadership was unanimously approved by the party board and parliamentary caucus on 30 April.[20] Brash promised to focus the party on controlling government debt, equality between Māori and non-Māori, and rethinking the Emissions Trading Scheme, with a target of getting 15 percent of the party vote in the next election.[4]

In November 2011, a recording of a conversation held between John Key and the former National Party member and former Mayor of Auckland CityJohn Banks, who had been selected as the new ACT candidate in Epsom, was leaked to Herald On Sunday.[21][22]3 News also obtained copies of the recording suggesting the two politicians were discussing issues related to ACT New Zealand's leadership.[21]

In the New Zealand general election, 2011, ACT fielded 55 list candidates, starting with new leader Don Brash, Catherine Isaac, Don Nicolson, John Banks, David Seymour and Chris Simmons.[23] The election was a disappointment for ACT, with the party's worst election result since it began in 1996. John Banks retained the Epsom seat for ACT, however the 34.2% majority held by Rodney Hide was severely cut back to 6.3% as large numbers of Labour and Green voters in Epsom tactically split their vote and gave their electorate vote to the National candidate Paul Goldsmith. Nationwide, ACT received only 1.07% of the party vote, placing 8th out of 13 on party vote percentage.[24] As a result, ACT were only entitled to one seat in the new Parliament, filled by John Banks. Subsequently, Don Brash announced that he had stepped down as leader during his speech on election night.[25][26] Following the 2011 general election John Banks stated that he believed that the ACT brand "...just about had its use-by date..." and needed to be renamed and relaunched.[27]